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Billions in pension money coming home

22 September 2017
New Government regulations requiring that asset managers invest an increased portion of their assets in Namibia will see billions of dollars being repatriated from beyond Namibian borders, particularly from South Africa.
Eos Capital Executive Chairman, Johannes !Gawaxab, said he is supportive of the Government plans, but on condition that the billions be given to firms with a good track record of investing and not fly-by-night firms.
“I believe that countries must use their own savings to develop,” !Gawaxab said.
Namibia has around N$110 billion invested in South Africa in the form of pension funds, long-term insurance and other investments, President Hage Geingob told an investment meeting in Johannesburg in October last year.
Finance Minister, Calle Schlettwein, disclosed last week that changes to regulations on domestic asset requirements to lift the domestic asset thresholds from 35 to 45 percent overtime are now with the legal drafters and are expected to be gazetted by the end of this month.
The threshold will be raised to 40 percent by January 2018, 42.5 percent by April 2018 and 45 percent by October 2018.
Schlettwein said the policy intention is for Namibia as a developmental state to effectively mobilise domestic resources to fund socio-economic development needs and investment opportunities.
“Namibia has over the years been experiencing perpetual savings-investment gap, jobless growth, high unemployment and poverty rates as well as high income inequality which are the second highest in the world,” he said during a meeting of the Retirement Institute of Namibia held recently in Swakopmund.
Schlettwein said the Government is also planning to establish a ring-fenced Infrastructure Fund.
“Government is also working on proposals for partial listing of some of the public enterprises and how best to leverage existing public assets to raise capital and crowd-in private sector participation.
“The Public Private Partnership Act has now entered into force and provides a regulatory framework for public-private partnerships as a conduit for private capital co-investment.
“We envisage projects with underlying revenue base in such sectors as energy, rail, water and services sectors to benefit from PPP formations, with greater domestic investor participation. The PPP legislation has thus opened up opportunities for the retirement industry and other institutional investors to leverage on the investment opportunities.”
The Public Procurement Act came into force in April this year with specific local preference provisions.
Schlettwein has called on the retirement fund industry to give effect to the provisions of this law and realise the multiplier benefits of local procurement in the economy.
He said the Financial Inclusion Council has approved the SME Financing Strategy, which intends to increasingly meet the financing needs of SMEs in the form of a Venture Capital Fund, the Credit Guarantee Scheme and the Training and Mentorship Programme.
The proposals are now being considered by Cabinet.
He said the domestic asset requirement rules seek to increasingly harness domestic savings to finance domestic investment opportunities.
“Such opportunities come in the form of the envisaged Infrastructure Fund, domestic treasury bills and bonds programme, local listing of some of the public assets, PPPs and other real sector investment opportunities,” Schlettwein said.
He said the retirement fund industry and the entire institutional investor community are in the vantage position to contribute to the achievements of these national objectives.
!Gawaxab expects the money from South Africa to be invested in Government bonds and unlisted companies, among others.
He advised financial services industry regulator, Namfisa, to be strict when issuing licences as some unscrupulous people will form companies overnight to source the money that will be returned from South Africa.
“There are a lot of Namibians like myself with a lot of experience in asset management; such Namibians must be allowed to invest this money, otherwise the money will end up going back to South Africa.”

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